Thomas Cook India Investor Presentation May 2012
Thomas Cook IndiaInvestor PresentationMay 2012
Important Notice
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This presentation is published for general information purposes and the information contained herein does not constitute or form part of an offer or invitation, or a solicitation of any offer, or recommendation for the purchase or subscription of securities or any interest in the Company. The information contained in this presentation shall not form the basis of or be relied upon in connection with any contract, commitment or investment decision.
This presentation may contain certain “forward looking statements”, plans and strategies with respect to the anticipated growth and future performance of the Company, which are subject to change by the Company without notice. The Company and its directors, officers, agents, or employees and its affiliates make no representation, warranty or assurance of any kind, express or implied, on the accuracy, completeness or usefulness of the presentation or the information contained therein or that the strategies or forward‐looking statements are reasonable or will be realised. This presentation is not intended under any circumstances to be a profit forecast or to guarantee future returns and the statements contained herein may or may not prove to be correct. The actual results could vary from the strategies and forward‐looking statements contained in this presentation, and such variations could be material. The Company and its directors, officers, agents, or employees and its affiliates shall not be liable for any indirect, incidental or consequential damages sustained or incurred in connection with the use, operation, or inability to use this presentation and information contained therein. The Company disclaims any intention or obligation to revise any forward‐looking statements, whether as a result of new information, a future event, or otherwise.
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India’s Leading Integrated Forex And Travel Operator
Leading integrated foreign exchange and travel services company
− 2011 revenue of Rs. 4,027m (up 18.3% from 2010)
− 2011 EBITDA of Rs. 1,177m (up 19.0% from 2010)
− Operations in India since 1881
Strong franchises
− Forex
− Leisure Travel Inbound
− Leisure Travel (Outbound & MICE/Domestic)
− Corporate Travel
Expansive retail distribution network
− 151 own stores, 117 franchises, 166 preferred sales agents and 29 extension counters across India
− 16 locations in Mauritius and 2 locations in Sri Lanka airport
Segment Revenue (2011A)
Financial Services12%
Travel & Related Services88%
October 2011
Signing of MasterCard agreement
Appointment of State Bank of India as MoneyGram sub‐agent
December 2005
Dubai Financial (LLC) acquires 100% of TCIM Limited
December 2006
Acquisition of 100% in Travel Corporation (India) Limited
February 1983
IPO on the Bombay stock exchange
1881
First office is established in Mumbai
February 2007
Merger with LKP Forex
March 2008
Thomas Cook UK Limited acquires 74.9% in the company
December 2008
TCIL issues 50.7m shares by way of a rights issue
July 2010
TCIL enters into seven‐year agreement with New Delhi International Airport and launches nine foreign exchange and travel counters
Company History
1881 1983 2005 2006 2007 2008 2009 2010 2011
3
44
Travel
Travel‐related ServicesFinancial
Services
Intra‐Group Synergies
Forex Scale Benefits
Leverage footfall
Leverage online platform
Marketing & brand
Distribution network
Operating and infrastructure costs
Customer access
Note consolidation more economical
Dealing room and ability to hedge
Cross‐Selling
Benefits Of Operating A Fully Integrated Forex And Travel Platform
• Outbound• Inbound• MICE / Domestic• Corporate
• Travel‐related Forex
• Insurance• Visas & Passport Services
• Other Travel Related Services
• Wholesale Forex
5
Attractive Market With Strong Growth Characteristics
Strong Real GDP Growth (2011‐2015E) Young Population Increase in Discretionary Spending
Supportive macro backdrop and dynamics...
FX Earnings from Tourism Outbound Travel from India Inbound Travel in India
...stimulate growth in our areas of operation
Source: Global Insight, UN Population Statistics; Euromonitor, Ministry of Tourism annual report 2011Note: Non discretionary spend only includes housing, food and non-alcoholic beverages
4.8%
5.2%
8.2%
8.3%
Brazil
Africa
India
China
39.1% 42.7% 48.6%
2000A 2010A 2040E25‐59 0–14 15–24 60 or above
53% 58% 65%
2005A 2010A 2015EDiscretionary Non Discretionary
7.212.6
22.5
2005A 2010A 2015E
3.95.7
7.8
2005A 2010A 2015E
649
331156
2000A 2005A 2010A
(Rs. bn) (m trips) (m trips)
6
3
3
8
2
4
7
17
2
7
2
2
4
3
2 5
24
2
12
2
2
6
2
24
2
3
2
6
2
11
3
83
4
2
3
4
6
Franchises
Our Broad Distribution Network Ensures We Are Well Positioned To Capture This Growth
Own stores
Extension counters
Mauritius
16 own stores
PSAs
2 Own storesSri Lanka
India151 Own stores117 Franchises166 PSAs29 Extension counters
D N Road (Owned & Leased)Gurgaon (Owned)Chembur (Owned)Nariman Point (Owned)
India ‐ Key properties
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Presence In Wholesale, Retail And Corporate Forex
Wholesale
Institutions(Banks, Full Fledged Money Changers, Restricted Money Changers)
Retail
Individuals(Walk‐ins at Shops & Airports, Agents)
Segments Characteristics
Purpose: bulk note consolidation and bulk sale
High volume and low margin business
Extremely sensitive to market movements and pricing
Purpose: leisure, education, remittances, migration
Relatively price inelastic at airports(1); some degree of elasticity at non‐airport outlets
Purpose: business travel
Typically corporates are from IT, manufacturing and fast moving consumer goods sectors
Sensitive to global economic conditions
Corporate
Corporate Houses(Travelling Employees)
Note: (1) Company has presence in Mumbai, Bangalore, Chennai, Cochin and Delhi Airports
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Broad Product And Service Offering For Retail And Corporate Forex Customers
Bank Notes Buying / selling Export Services provided in 26 currencies
Traveller Cheques
American Express traveller cheques Provided in six currencies: USD, GBP, Euro, AUD, JPY, CAD
Pre‐paid Cards
Re‐loadable and accepted at 1 million ATMs Denominated in USD, GBP, Euro, AUD, CAD, JPY, CHF and SGD
Pay Orders Foreign currency pay orders, available in 8 currencies
Wire Transfers
Money Gram Transfer
Available in 10 currencies
Person‐to‐person money transfer service
Forex Operational Overview
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Retail Outlets (Own Stores,
GCPs)
Implants, Corporate Hubs
Wholesale Hubs
Agent Outlets
CustomersPoint of Sale / Purchase of Foreign Exchange
Surplus Currency
Consolidation
Retail Customers(Tourists, NRIs,
Students, Business Travellers, etc.)
Corporate Employees
Wholesale Customers
(Banks, FFMCs, RMCs, Non‐Bank Retailers, etc.)
Currency Movement Within Branches
Export Centers
Dealing Room
Overseas Banks (for Export / Import)
Credit to Nostro Accounts
Day 0
Nostro Accounts
Day 1
Currencies Shipped
Day 2
Banks (Interbank Parties)
Settle Interbank Contracts
Monitor Holdings
On average, the complete cash conversion cycle is ~ 3 days
INR Funds
We have been granted Authorized Dealer (AD Category II) license by the RBI
10
Leisure Outbound Overview
Leading outbound tour operator by sales and passengers
− Offers outbound tour packages consisting of numerous components to c. 50 countries
− Also act as a sales agent for other travel operators
Distribution through multiple channels
Focus on long‐haul routes enables higher margins
Product innovation
− New destinations
− Products at various price points
− Fusion holidays – flexible tour packages
− Luxury products
List of Products & Services
Air tickets
Cruises
Rail tickets
Airport transfers
Hotel accommodation
Sightseeing
Tour guides
Packages
− Fully independent Tours
− Group inclusive tours
MICE & Domestic Travel Overview
Leading MICE player by sales
Comprehensive MICE solutions provided
Usual sales process involves pitches, followed by competitive bidding
Key customer sectors include pharmaceuticals, consumer durables, automotives and financial services
Corporate arrangements with a number of event management companies
MICE
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Domestic offers tour packages and individual tour components to domestic travellers
Distribution through multiple channels (own stores, GCPs, travel agents, website)
Special air inclusive fixed departure tours for small and large groups; innovative weekend packages; travel partner for unique events
Tie‐ups with local agents, hotels, guides to provide destination management services
Domestic Travel
Top three inbound player in India by sales1
Two brands:
Key markets: Europe, Japan and the US
Broad network of travel agents and tour operators worldwide
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Inbound Travel Overview
(1) Ministry of Tourism, Government of India.
List of Products & Services
Individual tours
Group escorted tours
MICE
Emergency medical assistance
Airport transfers
Excursions
Development of Comprehensive Product Portfolio
Improved Customer Reach & Service Delivery
Margin Improvement
− Leveraging scale
− Increased operating efficiency
Increased promotion
− Online presence
Strategy
Amongst top 3 corporate travel players in India
Provides both travel products and travel budget management services
Distribution through stores, Service Excellence Centre and “implants”
Over 700 clients
Predominantly Indian multi‐nationals
Corporate Travel OverviewList of Products & Services
Air tickets
Hotel accommodation
Car rental
Transfers
Meet and assist
Passport and visa services
Foreign exchange services
Insurance
Strategy
Increased focus on non‐air revenue streams
Improved Service Delivery
− Consolidation of service delivery
− Improved online ticketing platform
− Assessing customer satisfaction
Portfolio Diversification
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Business Drivers
14
Product Offering
Distribution
Continue to develop website functionality and content; Leverage online platform for B2C and B2B distribution
Expand into second and third tier cities; Increase footprint in strategic locations
Online
Retail
14
Potential to tie‐up with local bank and setup ATM network
Increase retail product penetration
Increase penetration, in particular retail pre‐paid cards
Introduce products and services of additional providers
ATM Services
Remittances
Pre‐paid Cards
Money Transfer
Travel‐related Services
Introduce new destinations for GIT and FIT
Geographic expansion to cover all regions of India for MICE sales
Develop offerings in new destinations to differentiate
Packages for niche holidays (e.g. cultural tours, religious tours, etc.)
Outbound Destinations
Source Markets
MICE Destinations
Outbound Packages
Travel
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Track Record Of Growth And Profitability
2,746
3,406
4,027
2009A 2010A 2011A
Net revenues (2009A–2011A)(Rs. m)
731
989
1,177
2009A 2010A 2011A
EBITDA (2009A–2011A)(Rs. m)
250
472
562
2009A 2010A 2011A
Net income (2009A–2011A)(Rs. m)
Note: Net Revenues and EBITDA includes other income
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Key Financials
(Rs m) 2009 2010 2011
Sources of Funds
Shareholders' Funds
Common Equity 211 212 212
Preference Capital 6 6 6
Reserves & Surplus 2,803 3,190 3,705
Loan Funds 1,700 2,016 2,286
Deferred Taxation (Net) 29 76 50
Total 4,750 5,499 6,259
Application of Funds
Fixed Assets (including WIP) 2,192 2,475 2,491
Investments 356 156 383
Current Assets, Loans and Advances
Sundry Debtors 2,071 2,225 2,264
Cash & Bank Balance 1,501 1,601 2,735
Loans & Advances 1,087 1,440 1,358
Less: Current Liabilities & Provisions
Liabilities 2,306 2,279 2,848
Provisions 151 118 123
Net Current Assets 2,202 2,869 3,386
Total 4,750 5,499 6,259
(1)
(1) Include 319,765 Class ‘B’ and 271,800 Class ‘C’ 0.001% Cumulative Convertible / Redeemable Preference Shares of INR10/- each, convertible into an equivalent number of Equity Shares, if the EPS of the Company exceeds 3.03 and 3.64 per share, respectively. These would be redeemed within a period of six months if the said EPS of the Company is not achieved based on the audited accounts of the Company as at the end of 31st December, 2013.
(Rs m) 2009 2010 2011
Cash Flow
Cash Flow from Operations 810 82 1,460
Cash Flow from Investing (513) 8 (300)
Cash Flow from Financing (615) 18 (50)
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Segmental PerformanceTravel & Related Services Financial Services
(Rs. m) (Rs. m)
In the travel business, 2009A saw a significant decrease in both leisure and business travellers given the overall difficult macro‐economic backdrop
Resurgence in economic activity spurred a recovery in the corporate travel and leisure outbound segments in 2010A
Underlying factors such as increased appetite of Indians to travel abroad remained supportive in 2011A and led to a strong result in the leisure outbound segment
TCIL’s foreign exchange operations were negatively impacted by rupee appreciation in 2009A
Challenging environment in 2010A, due to a continued appreciation of the rupee, compensated by
− increased demand for foreign currency from corporate and leisure travellers,
− TCIL’s ongoing expansion of the branch network and
− higher remittances
Strong growth in a more favorable market environment supported by a depreciation of the rupee in 2011A
2009 2010 2011 CAGRNet Revenues 417 384 435 2.1%Growth 0.6% (8.0%) 13.2%
Segment result 257 196 239 (3.6%)Margin 61.7% 51.1% 55.0%
Segment Capital employed 983 1,080 1,296 14.8%
2009 2010 2011 CAGRNet Revenues 2,235 2,720 3,303 21.6%Growth (16.8%) 21.7% 21.4%
Segment result 767 1,129 1,286 29.5%Margin 34.3% 41.5% 38.9%
Segment Capital employed 1,995 2,275 2,570 13.5%
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Potential For Growth
4,340
4,927
5,648
2012E 2013E 2014E
Net revenues (2012E–2014E)(Rs. m)
1,295
1,435
1,732
2012E 2013E 2014E
EBITDA (2012E–2014E)(Rs. m)
547
666
869
2012E 2013E 2014E
Net income (2012E–2014E)(Rs. m)
Leisure Travel(1) and MICE account for 33% of total revenues (2011A) and are expected to be the key growth drivers for the company going forward
(1): Includes Outbound, Inbound and Domestic Travel